The Clipper Corporation had net operating income of $380,000 and average operating assets of $2,000,000. The corporation requires a return on investment of 18%.

Please (support your answers with explanations):

A. Calculate the companys return on investment (ROI) and residual income (RI).

B. Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950. If the division planning to make the investment currently has a return on investment of 20% and its manager is evaluated based on the divisions ROI, will the division manager be inclined to request finds to make this investment? (Note: the decision model for the division manager is self-interested i.e. centers on the decisions effect on his evaluation criteria).

C. Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950. If the division planning to make the investment currently has a residual income of $50,000 and its manager is evaluated based on the divisions residual income, will the division manager be inclined to request funds to make this investment? (Note: the decision model for the division manager is self-interested i.e. centers on the effect on his evaluation criteria).